IEA cuts 2012 global oil demand forecast as economies slow

18 January 2012 12:19  [Source: ICIS news]

LONDON (ICIS)--Crude oil demand growth will slow to closer to 1m bbl/day in 2012, with a continued decline in demand among the OECD nations, the Paris-based International Energy Agency (IEA) said on Wednesday.

In its latest monthly oil market report, the IEA cut its 2012 global oil demand growth forecast to 1.1m bbl/day from an earlier estimate of 1.3m bbl/day because of the bearish economic climate and early indications of lower-than-expected oil demand growth in the fourth quarter of 2011.

“The two‐speed market will endure [in 2012], with non‐OECD economies providing relatively strong growth that more than absorbs the absolute declines foreseen in the OECD,” the Agency said.

“Developing economies saw consumption rise by 1.3m bbl/day in 2011 (or 3%), to 43.4m bbl/day, and are seen accelerating very modestly to an increase of 1.4m bbl/day (3.2%) in 2012,” it added.

“The comparable metrics for the OECD are declines of 0.6m bbl/day (or ‐1.2%) in 2011, to 45.6m bbl/day, and 0.3m bbl/day (‐0.7%) in 2012. Non‐OECD Asia dominates the growth trajectory throughout, providing gains of 0.7m bbl/day in 2011 and 0.8m bbl/day in 2012.”

The agency said it persists with a “business as usual” base case for GDP and for oil demand but acknowledges that “upcoming revisions to the GDP forecasts of the IMF and other institutions might result in much weaker growth still, even if not to the zero growth implied by our lower GDP variant.

“As usual, identifying a single smoking gun, for prices or oil demand, remains difficult.”

The downward revision on oil demand will see a reduced call on OPEC supply in 2012 the IEA said.

“The group’s 30m bbl/day target also mirrors average 2011output levels,” it added.

“Global oil supply rose by 100,000 bbl/day to 90.0m bbl/day in December, with rebounding output from Libya and Saudi Arabia partially offset by declines in non‐OPEC countries.

“Compared to December 2010, global oil production stood 1.8m bbl/day higher, 80% of which stemmed from increasing output of OPEC crude and NGLs [Natural Gas Liquids],” it added.

Read Paul Hodges’s Chemicals and the Economy blog

By: Nigel Davis
+44 20 8652 3214

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